140725_IPCsolarcharge.pdf

Idaho Public Utilities Commission
Case No. IPC-E-14-18, Order No. 33079
Contact: Gene Fadness [phone]

Commission opens case to allow comment
on Idaho Power’s proposed solar integration charge

BOISE (July 25, 2014) – The Idaho Public Utilities Commission is opening a case to
investigate a proposed integration charge that would be assessed solar
developers to cover Idaho Power’s costs of integrating solar output into its
transmission and distribution system.

Generation sources like wind and solar that vary in their output depending on
weather conditions require back-up sources to ensure system reliability. Utilities
must provide operating reserves from baseload (non-intermittent) resources –
such as a natural gas or hydro plant – that can be quickly ramped up or down to
offset changes in generation from variable sources. Restricting the use of
baseload resources to provide back-up for intermittent generation results in
higher power supply costs that are eventually passed on to customers, Idaho
Power claims.

To prevent customers from paying those costs, Idaho Power proposes a solar
integration charge that would be discounted from the amount the utility pays to
solar developers. The utility recently completed a study and proposes charges
that gradually increase as solar generation increases. Idaho Power proposes that
developers pay about 40 cents per megawatt-hour when there is 100 megawatts
or fewer of solar generation on Idaho Power’s system. That cost increases to
$1.50 per MWh when solar penetration is between 100 and 300 MW; $2.80 per
MWh at a solar penetration of between 300 and 500 MW; and $4.40 per MWh at
a solar penetration of between 500 and 700 MW. Those proposed amounts are
for contracts signed this year and would gradually change during the length of the
sales agreement.

The commission is inviting other parties to intervene in the case to comment on
whether an integration charge is necessary, the reasonableness of the charge, the
method of determining the charge and other related issues. Interested parties
seeking to present evidence, present witnesses or cross-examine witnesses must
file a petition to intervene with the commission by no later than Aug. 6. After that
time, the commission will establish a hearing schedule. Comment deadlines will
also be established for persons wishing to present their views without formally
intervening.

The rapid growth of wind development and solar potential “had led to the
recognition that Idaho Power’s finite capability for integrating variable and
intermittent generation is nearing its limit,” the company claims in its application.
“Even at the current level of wind generation ... dispatchable thermal and hydro
generators are not always capable of providing the balancing reserves necessary
to integrate variable generation,” the company claims. “This situation is expected
to worsen as wind and solar penetration levels increase, particularly during
periods of low customer demand.”

Idaho Power recently signed six solar contracts for 60 megawatts in its Oregon
service territory and is nearing final agreements for an additional 120 MW of solar
in Idaho. The utility claims there are an additional 260 MW of proposed solar
projects seeking pricing and contracts. The utility’s wind generation is up to 678
MW, about 505 MW added since 2010. An update to the integration charge now
paid by wind developers is the subject of another case before the commission.

Copies of Idaho Power’s solar integration study and other documents related to
this case are available on the commission’s Website at www.puc.idaho.gov. Click
on “Open Cases” under the “Electric” heading and scroll down to Case No. IPC-E-
14-18.

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